Bridge Realization Estimate
ML model predicts what fraction of the bridge is achievable (accuracy: 60%, n=5,839)
Expected realization: 70% of modeled bridge. Strengths: Occupancy Rate. Risks: Bed Count, Commercial Payer %. Risk-adjusted uplift: $32.0M (vs $45.9M modeled).
EBITDA Bridge — 7 RCM Levers
Each bar shows the annual EBITDA impact at full run-rate. Revenue levers increase top-line; cost levers reduce operating expense; cash acceleration releases working capital. Calibrated to published research bands (Denial 12%→5% = $8-15M on $400M NPR).
Lever Detail
Each value shows its data source. SELLER = seller data room, DEFAULT = model default, BENCHMARK = P75 peer benchmark.
| Lever | Current | Target | Revenue | Cost | EBITDA | WC | Ramp |
|---|---|---|---|---|---|---|---|
| Cost to Collect | 4.5% DEFAULT | 2.5% BENCHMARK | $0 | $17.4M | $17.4M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $16.8M | $479K | $17.3M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $2.7M | $7.9M | $10.6M | $33.4M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $558K | $558K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 20.8% BENCHMARK | $0 | $0 | $0 | $0 | 18mo |
| CDI / Case Mix Index | 135.0% DEFAULT | 142.0% BENCHMARK | $0 | $0 | $0 | $0 | 18mo |
Implementation Timing Curve
Linear ramp to full run-rate per lever. Month 0 = close date. Partners should expect 60-70% of total uplift realized by month 12.
| Lever | M0 | M3 | M6 | M9 | M12 | M18 | M24 | M36 |
|---|---|---|---|---|---|---|---|---|
| Cost to Collect | $0 | $4.4M | $8.7M | $13.1M | $17.4M | $17.4M | $17.4M | $17.4M |
| Denial Rate Reduction | $0 | $4.3M | $8.6M | $12.9M | $17.3M | $17.3M | $17.3M | $17.3M |
| A/R Days Reduction | $0 | $3.5M | $7.1M | $10.6M | $10.6M | $10.6M | $10.6M | $10.6M |
| Clean Claim Rate | $0 | $279K | $558K | $558K | $558K | $558K | $558K | $558K |
| Cumulative | $0 | $12.5M | $25.0M | $37.2M | $45.9M | $45.9M | $45.9M | $45.9M |
Returns Sensitivity (IRR / MOIC)
5-year hold, 5.5x leverage, 3% organic growth, 10%/yr debt paydown. Green = exceeds 20% IRR hurdle. Amber = 15-20%. Red = below hurdle or loss. RCM uplift of $45.9M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | -100% / 0.0x | -100% / 0.0x | -100% / 0.0x | -100% / 0.0x | -100% / 0.0x |
| 9.0x | -100% / 0.0x | -100% / 0.0x | -100% / 0.0x | -100% / 0.0x | -100% / 0.0x |
| 10.0x | -100% / 0.0x | -100% / 0.0x | -100% / 0.0x | -100% / 0.0x | -100% / 0.0x |
| 11.0x | -100% / 0.0x | -100% / 0.0x | -100% / 0.0x | -100% / 0.0x | -100% / 0.0x |
| 12.0x | -100% / 0.0x | -100% / 0.0x | -100% / 0.0x | -100% / 0.0x | -100% / 0.0x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 1416% before the 6.5x covenant trips. RCM uplift reduces leverage from 99.0x to -85.5x, adding 184.5 turns of cushion.
5-Year Value Creation Waterfall
EBITDA trajectory: 3% organic growth + RCM uplift ramp (full run-rate at month 18).
| Base EBITDA | RCM Uplift | Total | Margin | |
|---|---|---|---|---|
| Entry | $-41.7M | — | $-41.7M | -4.8% |
| Year 1 | $-43.0M | +$30.6M | $-12.4M | -1.4% |
| Year 2 | $-44.3M | +$45.9M | $1.6M | 0.2% |
| Year 3 | $-45.6M | +$45.9M | $259K | 0.0% |
| Year 4 | $-47.0M | +$45.9M | $-1.1M | -0.1% |
| Year 5 | $-48.4M | +$45.9M | $-2.5M | -0.3% |
Achievement Sensitivity
What if we only achieve a fraction of each lever? 50% = conservative, 75% = base management case, 100% = plan, 120% = stretch.
| Lever | 50% | 75% | 100% | 120% |
|---|---|---|---|---|
| Cost to Collect | $8.7M | $13.1M | $17.4M | $20.9M |
| Denial Rate Reductio | $8.6M | $12.9M | $17.3M | $20.7M |
| A/R Days Reduction | $5.3M | $8.0M | $10.6M | $12.7M |
| Clean Claim Rate | $279K | $418K | $558K | $669K |
| Total | $22.9M | $34.4M | $45.9M | $55.0M |
Peer Context — Where This Hospital Sits
Key metrics vs 80 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | -4.8% | -5.2% | 5.0% | 18.1% | P27 |
| Net-to-Gross | 21.8% | 10.1% | 16.0% | 20.8% | P81 |
| Occupancy | 75.6% | 58.8% | 66.3% | 75.7% | P74 |
| Rev/Bed | $1.8M | $932K | $1.2M | $1.5M | P87 |
| Exp/Bed | $1.9M | $833K | $1.1M | $1.4M | P86 |
Bridge Methodology
Coefficients calibrated to published research bands: denial 12%→5% = $8-15M on $400M NPR. Current metrics estimated from HCRIS public data and ML predictions. Target metrics set at P75 peer benchmarks with 60% gap closure assumption. Revenue levers use NPR × delta × avoidable share. Cost levers use claims volume × cost per reworked claim. Working capital from AR reduction is one-time cash (not included in recurring EBITDA). Returns assume 5.5x leverage, 3% organic growth, 10%/yr debt paydown.